AML Training.md

AML/CTF Training Summary

Key Learnings

1. What is Money Laundering?

• Process of hiding the origin of illegally gained money to make it appear legitimate.
• Linked to predicate offences like fraud, human trafficking, tax evasion, etc.
• Terrorist financing uses legal or illegal funds to support terrorism.

2. Money Laundering Stages

• Placement: Introducing dirty money into the system (e.g., cash deposits).
• Layering: Complex transactions to disguise money’s origin.
• Integration: Using "clean" money to buy assets or investments.

3. Customer Due Diligence (CDD)

• Identify, assess, and mitigate risks with customers.
• Risk levels: Simplified (low risk), Standard (default), Enhanced (high risk like PEPs).
• Ongoing monitoring is essential.

4. Red Flags to Watch

• Unusual customer behavior or reluctance to share info.
• Transactions that don't make commercial sense.
• High-risk payments (e.g., from sanctioned or high-risk countries).
• Complex company structures, nominees, offshore accounts.

5. Reporting Suspicious Activity

• Report suspicions promptly to the MLRO — do not investigate alone or tip off customers.
• Reporting is required even after the business relationship ends.

6. Offences and Penalties

• Assisting, failing to disclose, or tipping off are criminal offences with severe penalties.
• Always act in good faith and comply with reporting obligations.

7. Politically Exposed Persons (PEPs)

• Higher risk due to influence and potential for corruption.
• Require enhanced due diligence and ongoing monitoring.

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Memory Tricks

• PLA = Placement, Layering, Integration — remember the three stages of laundering.
• CDD = I-A-M: Identify, Assess, Mitigate — steps of due diligence.
• RED FLAGS:
  • Unusual activity
  • Unusual transactions
  • High-risk payments
  • High-risk customers
• MLRO = Your AML “go-to” person for all suspicions.
• Think: "Don’t tip, just flip it to MLRO" — never tip off suspects, always report.
• PEP = Powerful, Elevated Person — extra care needed.